SBA 7(a) Q&A
Short answer
Yes, an SBA 7(a) loan can finance a partner buyout even if the exiting partner is a family member, provided specific conditions are met.
Partner buyouts are eligible for SBA 7(a) financing. For family members, the transaction must be an arm's length transaction, meaning the terms and valuation are fair and equitable, as if between unrelated parties. A business valuation is always required to justify the purchase price.
A son wants to buy out his father's 50% share of a $1,000,000 business. An independent business valuation would be required to determine the fair market value of the father's share ($500,000), which could then be financed by an SBA 7(a) loan.
Insider move
Lenders pay close attention to the arm's length nature of family buyouts to prevent conflicts of interest or inflated valuations. They require a strong, independent valuation and clear documentation of the transaction terms.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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